Announcing the merger of Indian operations, GIL vice-chairman and managing director and SBPI managing director V Thyagarajan said that apart from a market share of around 7.2 per cent, the synergies of the merger would start flowing from 2002, and reach its peak by 2003.

The parent, GlaxoSmithKline Plc, shall hold 48.83 per cent in the new merged Indian operations, he said.

The board of both companies met separately on Friday to approve the scheme of amalgamation recommended by the two valuers, Arthur Anderson and NM Raiji & Company following the merger of their global parents. The valuation was done giving due consideration to the discounted cash flow, net asset value and market price.

When asked about the increase in stake by the parent in future, Mr Thyagarajan said that intention in India is to have a majority, but that would be subject to review at the time of increasing stake.

On the wholly-owned subsidiary of SBPI by the parent, Mr Thyagarajan said that the same is under review. "However we will do everything to protect the interest of SBPI," he said at a press meet.

SmithKline Beecham Consumer Healthcare based in New Delhi has also been kept outside the purview of the merger. The move, analysts said, does not come as a surprise since Glaxo India had hived off its baby food product range and `Complan' to Heinz.

The merged entity, with a topline in excess of Rs 1,300 crore and a bottomline of around Rs 100 crore, will have a product basket of around 250 brands of which the focus will be laid on around 50 brands. "Five years from now the product portfolio will look different from what it looks today," he said.

He further said that vaccine will be an important part of our portfolio in future. Significant mileage will be achieved by leveraging the large pool of product base backed by an equally large field force, he added. On the duplication of manpower and other fixed assets, Mr Thyagarajan said that rationalisation at all levels would take place and some kind of separation package needs to be worked out. The head office of SBPI in Bangalore may in all probability be leased out, he said. The property was constructed few years back at a cost of around Rs 15 crore.

While the process is expected to be completed in the course of the year, the merger when approved by the courts, will be effective retrospectively from January 1, 2001. The merged company will bear the corporate name GlaxoSmithKline Pharmaceuticals Ltd.